Vietnam-focused private equity firm Mekong Capital has announced that its Mekong Enterprise Fund II (MEF II) made a full exit from its investment in Mobile World Investment Joint Stock Company (MWG) at a returns multiple of 57x and IRR of 61.1 per cent, according to a press release.
The final block of 5 million shares was sold at a price of VND165,000 ($7.3) per share and completed on 29 January 2018. The cumulative net proceeds from the sale of MEF II’s MWG shares and dividends received was $199.4 million.
This was the culmination of an exit process that began with a pre-listing private placement shortly before the 2014 public listing of MWG on the Ho Chi Minh City Stock Exchange and involved gradual sale of blocks of shares to institutional investors approximately once per quarter after the listing.
MEF II originally invested $3.5 million in MWG, the biggest mobile device and home appliance retailer in Vietnam for a 35 per cent stake in 2007.
Over the 10.5 years holding period of this investment, it generated a return multiple of 57x in USD and an IRR of 61.1 per cent in net of taxes and transaction expenses, making it one of the most successful private equity investments in the history of Asian Private Equity.
“When we originally invested into MobileWorld in 2007, they had seven stores and a $10 million company valuation. Our original goal was to increase to 50 stores and a $50 million company valuation. The success of this investment has exceeded our wildest expectations,” said Mr. Chris Freund, Partner at Mekong Capital.
“It’s unfortunate that we now must complete our 10.5-year journey together with MWG, he stressed. “Our fund MEF II was launched in 2006 and ultimately had a 12-year term, hence we needed to complete the divestment of our remaining investments in MEF II including MWG in the first few months of 2018.”
Freund also emphasized that Mekong Capital wants to continue as a shareholder of MWG for the foreseeable future especially as they ramp up Bach hoa XANH into Vietnam’s leading supermarket chain.
During its 10.5-year holding period by the MEF II, MWG has grown from seven stores to over 2,000 stores today under four different retail brands: thegioididong.com, Dien may XANH, Bach hoa XANH and vuivui.com. The company has also recently announced the acquisitions of Tran Anh Digital World and Phuc An Khang pharmacy chain.
Mekong Capital specializes in consumer-driven businesses and looking to invest in fast-growing companies, with ambitious expansion plans, and a commitment to building management teams that will successfully execute on those expansion plans. Its funds have completed 32 private equity investments in Vietnam, of which 24 have been fully exited.
Launched in 2006, Mekong Enterprise Fund II is the second private equity fund managed by Mekong Capital. MEF II made 10 investments of which nine have already been fully exited.
Founded by a team of 5 co-founders in 2004, MWG initially established itself as the market leader and most prominent mobile device retailer in Vietnam, specializing in mobile phones, tablets, laptops, accessories and other related products through its thegioididong.com store network.